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T-EPF M5L1 Key Terms
Traditional EPF Module 5 Lesson 1 Key Terms
Term | Definition |
---|---|
Financial Plan | Ongoing process that will support both your current needs and your future needs, such as retirement. |
Wealth | The amount of money you have left over after you list your assets and subtract your debt. |
Cost of Living | The amount of money needed to cover basics such as housing, food, taxes, and healthcare. |
Budget | The best estimate of revenue and expenditures to help guide financial choices in a future period of time. |
Saving | Setting aside for a purchase in the near future through savings accounts, money market accounts, or certificates of deposit. Slow growth and low risk. |
Investing | Owning a share of a business with the expectation that you will get a higher return. Examples include stocks, bonds, and real estate. Better returns than savings, but more risk. |
Speculating | Gambling money with the goal of getting a high return in a short period of time such as day-trading. Very high risk and potentially high reward or loss. |
Investment Vehicle | A way for an individual to invest their money with the hopes of growing it. |
Stocks | Shares in the ownership of a company. |
Dividends | Distribution of company profits to its shareholders. |
Bonds | Companies and governments will issue bonds as a way to raise money. Individuals are essentially lending companies or governments money in this format. |
Maturity Date | When the bond issuer is expected to repay the initial amount borrowed. |
Coupon Rate | The interest rate on a bond. |
Mutual Funds | A portfolio of stocks and bonds that is invested in by a group of people that is professionally managed. |
401k | An employer-sponsored retirement plan that provides for potential investment growth, tax advantages, and opportunities to build your wealth. |
IRA | Individual retirement account plan that provides for potential investment growth, tax advantages, and opportunities to build your wealth. |